The dollar is back below 78 US cents as commodity prices fall and the US dollar bounces back from last week’s fall.
At 0700 AEDT on Tuesday, the local unit was trading at 77.97 US cents, down from 78.36 cents on Monday.
OM Financial, senior client adviser, Stuart Ive, said the US dollar fared well despite new data showing that US sales of existing homes tumbled 4.9 per cent in January.
“A stronger US dollar means weaker commodity prices and that’s really what is weighing on the Australian dollar for the time being,” he said.
“The Aussie dollar is trading in a very narrow range at the moment. We’ve gone from the top of that range to the bottom and then crawled around the bottom of the range for the rest of the session.”
Ive said the market was gearing up for Congressional testimony from US Federal Reserve chair, Janet Yellen, on Tuesday and Wednesday night, Australian time.
He expects currency markets to be quiet ahead of the hearing.
“We’re waiting to see if and when the Fed will raise its interest rate, that’s the main focus at the moment,” Ive said. “The expectations are for the Fed to start raising its rate in June this year.”
AAP